Scandinavia's Largest Bank Shocks Region With Mass Layoffs

Nordic banking giant Nordea, which recently stunned the region with its much-debated step to move its headquarters from Sweden to Finland, has added insult to injury by announcing layoffs of around 13 percent of its total staff due to automation. Trade unionists condemned this step as premature, and it triggered a crash in Nordea's shares.

Scandinavia's largest bank Nordea, which currently employs around 32,000 people, shocked the Nordic region with plans to reduce its workforce by 6,000 in the coming three-four years.

Nordea CEO Casper von Koskull explained that the company is almost two years into a profound transformation process, whose aim was to "structurally bring down costs" and "increase efficiency" amid a "strong balance sheet" and "robust business model." Nordea's aim is to reduce expenditures by roughly €5 billion ($6 billion) by 2021.

According to Von Koskull, the process of disposing of personnel with a more traditional set of skills to reduce costs and invest more in IT and digital banking represents a "shift of competence."

The company's goal for the coming years is to "take its centers of excellence to the next level." This will be achieved by increasing automation amid a "cultural transformation into a purpose-led and values-guided organization," the Finnish daily Hufvudstadsbladet reported.

Mobile bank is increasingly becoming the first point of entry for millions of our customers. #digital #NordeaQ317 pic.twitter.com/UyQfskiRFJ

— Nordea (@Nordea) October 26, 2017

​Berit Ohlsson of Sweden's Financial Sector Trade Union (Finansförbundet) called the layoffs extensive, yet predictable.

"Everyone knows that the industry is changing due to digitalization, automation, mobile banking, internet banking and decreased cash management. And this is something we have lived with for a long time. We know that all this means fewer employees," Berit Ohlsson told Swedish Radio.

According to Nordea's employees' trade union representative Paula Hopponen, the Nordic region was not ready for such drastic cuts. Hopponen also called Nordea's cuts "premature."

"The new systems are not yet in place and neither the staff nor the customers are ready to embrace them. Customers' needs are so multi-faceted that machines cannot take over," Paula Hopponen told Hufvudstadsbladet. "Being an IT expert does not mean that you also are a banking expert. I cannot endorse experienced employees being thrown out," she added.

Hopponen added that the company was still struggling with the aftermath of the previous staff reduction, which happened in 2015 and had a dramatic effect on the workload.

"There is more work than staff can handle," Hopponen argued.

In September, Nordea plunged Sweden into shock by announcing the move of its headquarters to Helsinki, Finland following a protracted conflict with the country's "red-green" government over proposed tax increases and stricter regulations. Nordea also claimed Finland was a more desirable host nation due to its membership it the Eurozone. While the transfer ignited hopes of more jobs, around 900 of Finland's 7,000 Nordea employees will ultimately be pink-slipped.

Earlier this week, Nordea reported operating profits of around €1 billion ($1.2 billion), down 5 percent from the same period last year. Following the layoff announcement, Nordea's shares fell 15 percent, Swedish newspaper Norrköpings Tidningar reported.

“We see synchronized growth in our home markets” Casper von Koskull #NordeaQ317 pic.twitter.com/IgCyRyfv5x

— Nordea (@Nordea) October 26, 2017

​Originally formed in 1995 through the merger of Finland's Merita Bank with Sweden's Nordbanken, Norway's Kreditkassen and Denmark's Unibank, Nordea operates in 19 countries around the world, serving 11 million private and 700,000 corporate customers.